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Regulation and Compliance > Federal Regulation > SEC

Fake Advisor Calling Himself 'Dr. Cash' Arrested for Securities Fraud

By Jeff Berman

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An unregistered advisor who allegedly used the alias “Dr. Terrence Cash” to conceal his identity and criminal past from investors has been arrested and charged with defrauding more than $4 million from multiple investors through the offer and sale of investments in a fictitious investment fund, according to Audrey Strauss, acting U.S. Attorney for the Southern District of New York.

Related: Should Compliance Officers Be Held Personally Liable? SEC’s Peirce Weighs In

In a complaint filed Tuesday in U.S. District Court for the Southern District of New York in Manhattan, Assistant U.S. Attorneys Martin S. Bell and Robert L. Boone claimed Terrence Chalk, of Passaic, New Jersey, and Orlando, Florida, committed securities fraud and wire fraud as part of a scheme to fraudulently induce individuals to invest in his wealth management business under false pretenses, including operating under an alias to hide his criminal past.

Chalk was arrested the same morning in Orlando on a criminal complaint and was presented before a magistrate judge in the Middle District of Florida, according to Strauss.

From in or about 2017 through in or about October 2020, Chalk sold clients an equity stake in a purported fund that would supposedly invest in companies to generate returns, but he did not invest the money as promised, the complaint alleged.

The funds instead were apparently “used largely to make a combination of personal and business expenses,” according to the complaint. Those expenses allegedly included: about $1.7 million to pay bills for personal credit cards; a recurring payment totaling about $17,000 to an NBA basketball organization that “appears to be for season ticket payments”; “transfers of substantial amounts of money to an incarcerated prison inmate” (about $22,600); “large purchases” from a jewelry retailer (about $30,000); and “what appear to be car payments to a BMW luxury car dealer” (about $74,000), the complaint claimed.

Related: FINRA: Ex-BofA Analyst Charged ‘Adult Entertainment’ on Corporate Card

Previously, on or about Aug. 31, 2009, Chalk was convicted of identity theft and conspiring to make false statements to financial institutions, “all in connection with a scheme to fraudulently obtain loans and lines of credit in the name of entities he controlled,” the complaint said. Among other things, he allegedly applied for loans “using the identifiers of a dead relative, and continued — from jail — to direct the submission of fraudulent documents to a BMW car dealership after his initial arrest on those charges in order to secure BMW automobiles for associates of his,” the complaint said.

On or about Jan. 28, 2010, he was sentenced to 76 months’ imprisonment, the complaint said.

In a separate complaint filed Tuesday against Chalk in the same court as the U.S. Attorney’s complaint, the Securities and Exchange Commission alleged that, from 2017 to 2020, Chalk raised about $5 million for the same fictitious fund and misappropriated a large portion of the funds raised.

Instead of investing the funds as promised, Chalk and entities he controlled, including Greenlight Advantage Group Inc. and Greenlight Investment Partners — all also named as defendants in the SEC complaint — misappropriated the vast majority of invested capital, the SEC said.

Chalk used more than $700,000 to pay personal expenses, the SEC alleged. To perpetuate and conceal the fraud, Chalk and the Greenlight entities also used about $1.8 million of investor money to make purported dividend payments to prior investors in “Ponzi-like fashion,” according to the SEC.

The SEC’s Office of Investor Education and Advocacy encouraged investors to ask questions before investing and to review investor alerts, including those on Ponzi scheme red flags and Questions to Ask When Hiring an Investment Professional.

Jeff Berman

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